There are governments that totally control their economy and do not do business with other countries. There are governments that rule monetary policy and tax business, but do not become concerned in the markets otherwise. Similar to mixed economies, the positions of a government in the configuration of an economy is crucial to understand in order to understand the economics of the country. Concepts of Macroeconomics and Understanding Business or economic cycles focus on the variations, both anticipated and unexpected, within an economy. Variations in business cycles are able to be seen as short-term and long-term progression developments and they could shift.
Using Financial Statements Accounting/ACC 561 May 7, 2013 Seth Jardine Using Financial Statements Using the financial statements of a business allows a person to view the current financial position and performance of business without the need to check the individual transactions made by the business. The different financial statements provide different information for different people and for different purposes. The owners or shareholders of a business may use the financial statements to see the profit margin of the business or to judge the security of the investment they have in the business. Investors may use the financial statements to formulate a strategy for making investment decisions involving the business, and creditors may use the financial statements to decide whether making a loan to the business is a good risk. The four different types of financial
This is where the business sells its accounts receivables to a business that specialises in debt collection. The debts will be put at a reduced amount by the factoring business, but the advantage is that it provides an injection of cash into the business with funds to continue operating and stops the problem turning into a solvency issue. Woolworths began using a factoring company to collect its accounts receivable at the start of 2015. This is a low-risk funding option for Woolworths and allows the business to meet its financial objective of liquidity. It saves the business time and effort involved in chasing debtors and allows management to focus on the prime function of grocery retailing, although it costs Woolworths a percentage of repayments to do this.
This week we learned that companies are required to prepare a statement of cash flows because it gives a more accurate snapshot of the actual cash flow of a company. Financial statements give an overall picture of how much revenue a company is reporting, but high revenue does not guarantee that the company has the ability to pay its bills. The statement of cash flows is a tool designed to help external users make sound economic decisions about the company. The statement of cash flows is divided into three sections: 1) operating activities, 2) investing activities, and financing activities. The operating activities section analyzes the company's flow of cash as it relates to a net loss or net income.
We are going to discuss the level of business risk for some of those factors. In the later part we will also calculate the volatility of some important accounts of the financial statements from the historical data given in the case to get the overall idea about its business risk. Centralized Authority:It has both pros and cons depending on the size of an organization. In a small organization the more the authority is centralized the less it faces business risk. But following centralized organizational structure in a huge corporation like AHP is questionable.
A cash flow forecast is also prepared which gives an estimate of the amount of cash the company expects to flow in and out and also includes all the projected income and expenses. This will help in predicting any upcoming cash surpluses or shortages which can be used to help make the right decisions. It can help in planning new equipment purchases or identifying if the business needs to secure a small business loan. The cash flow forecast is also used to check if the company is meeting expectations. Comparing actual income and expenses with the forecasts can identify where the company is over or under performing.
This is evident in the undertaking to provide other related financial services such as funds transfers, money orders and payment of bills besides payday loans. Majority of payday loans companies only dealt with the loans and checking thus increasing competition across the nation. Cash connections discovered the rift left by such an approach to business and filled the gap with coming up with new products. A broad differential strategy is necessary where the needs of customers cannot be met by a standardized product. To achieve the objective of serving many customers and acquiring a significant market, share the cash connections embarked to not only meet the financial needs of the company, but the needs to transfer the said funds.
Capital gains and losses are important to understand because it can directly affect and individual or a business adjusted gross income. Being able to understand gross income inclusions and exclusions is also important. This information is important because it is needed to determine the tax payer’s taxable income. Knowing the difference between a cash and accrual methods of accounting is also important when entering the business world because the year the tax payer’s income is taxed depends on the accounting method they use. Before this class, I did not know how to calculate AGI or hoe to determine whether an item was a considered as taxable and able to be claimed as an itemized deduction.
COURSE WORK 1- FINANCIAL MANAGEMENT/FINANCIAL ACCOUNTING 1. UNDERSTANDING OF THE DIFFERNCE BETWEEN FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING Financial accounting is focused on generally accepted accounting principles- producing a limited set of financial statements. This includes the balance sheet and the income statements, by which the overall past performance of business can be judged by outsiders. Management accounting deals with information that is not made public and is used for internal decisions making only. These reports are far more detailed than financial accounting reports and can cover performances and activities by departments, teams, products, customers and employees.
Pro forma financial information is generally used to illustrate the effects of transactions such as business combination, and change in capitalization. There are countless reasons on why companies use pro forma statement in their business, the most significant is the planning and control received when using pro forma. The process of using pro forma statements are less time consuming, they help businesses evaluate and make a better distinction between business plans (Scarborough, Wilson, & Zimmerer, 2009, p. 196). Pro forma statements are an excellent outlet for resources that will help a business forecast expected earnings should the company chose to merge with another company or even if the company wanted to sell off part of it operations (Scarborough, Wilson, & Zimmerer, 2009, p. 196). The pro forma statements are commonly used when applying for a business loan.